The Two Golden Rules of Safe Stock Investing

2.1 First Golden Rule: 'Buy what's worth owning forever'

This rule tells you that when you are selecting which stock to buy, you should think as if you will co-own the company forever. So before you decide to co-own a company, you need to study the company very carefully and find out whether it is really a wonderful business.

This is beautifully said by Warren Buffett; " Our favourite holding period is forever " and to avoid temptation about buying stocks which don't meet this criteria, he said " If you don't feel comfortable owning a business for 10 years, then don't own it even for 10 minutes".

The Benefits of this approach of co-owning a company are:

Stock of such a company is most likely to see a consistent increase in price over the years, giving you the benefit of compounding increase

Such a company is able to withstand tough times better than others and hence you will not lose money on it in the long run

You will have to buy and track stocks of only a few companies. This will give you an opportunity to understand them even better & gain the confidence to make larger investments in each one.

How to determine if a company stock is worth owning forever ?

A company stock is worth owning forever, if the answer to the following questions is an unambiguous "Yes".

(a) Is the company capable of growing its profits even during tough times? and,
(b) Does the company have a great financial track record?

In order to have a better understanding of whether a company is worth owning forever, we came up with the 10-YEAR X-RAY and the FUTURE PROSPECTS for companies which help you understand the financial track record of the company and what we can expect from it in the near future. At MoneyWorks4me, we give a colour coding for each stock as Green, Orange and Red which helps you better understand whether the company is Great, Good or Risky. For the best returns, you must invest in Green companies and avoid Red companies.

About MoneyWorks4me.com

MoneyWorks4me.com is India's 1st Technology-assisted Multi-asset Fiduciary Portfolio Advisory. We started in 2008 with the mission to make 'wealth-creation thru' investing' safe and simple for Retail Investors—make it easy for customers to manage a large portion of their Investable Surplus through our solutions as one portfolio, just like family offices/UHNIs. We are SEBI registered—No. INH000000719... know more